Schwieterman: Pull back in corn futures weakens live cattle

Corn                                        Estimated Fund Position
Trends
Short Term: Up                     Net Long Futures and Options: 32024
Long Term: Up                     Change: +3000
Overnight Trade: N -4 Z -7 @7:30 AM
Opening Calls: 3-8 Lower

Export sales were poor again at 171,400 MT of old crop and 210,600 MT of new crop sales. Interior basis levels are too strong to allow exports, so we are keeping what is left of our grain here at home. The December contract closed above the 200-day moving average for the first time since November. It looks like the market will consolidate around that moving average in today’s trade. Forecasts are still threatening and expectations are for lower crop condition ratings on Monday. Buy breaks.

Wheat                                        Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: -46602
Long Term:Up                           Change: +4000
Overnight Trade: Chicago: N -4 KC: N -3 @7:30 AM
Opening Calls: 3-5 Lower

Wheat export sales were great at 842,000 MT. This is exactly what the wheat market needs in order to have a chance at any independent strength. The charts look friendly right now and a test of the $7.00 area in the July KW is likely. We will need to see more export sales like today’s or a surge higher in the corn in order to take out the May high of $7.30.

Soybeans                                   Estimated Fund Position
Trends
Short Term: Up                         Net Long Futures and Options: 188059
Long Term:Up                           Change: +6000
Overnight Trade: N -8 X -12 @7:30 AM
Opening Calls: 10-15 Lower

Soybean export sales were good. The old crop total of 171,400 MT was a marketing year low, but any positive number is good. New crop came in at 444,000 MT and the meal and oil sales were solid as well. With production prospects shrinking, it is the job of the market to slow demand and that isn’t happening yet. July 2013 soybeans look cheap at $13.25, which is more that 60 cents under November.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: 10-30 Lower

Live cattle futures finished modestly lower on Wednesday and are expected to see two sided trade once again today. The trading range of the past 5 days is expected to stay intact, with the August contract between 116.30 and 118.30. Cash trade could start developing today, with short bought packers potentially needing cattle for end of the week kills. The pull back in corn futures is taking some of the fire out of deferred live cattle contracts.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: 10-30 Lower

Feeder cattle futures are expected to see mixed trade today, as oversold conditions offset technical and renewed hedge selling. Softer overnight corn values were not enough to lift feeders higher. While cash prices remain firm, prospects of a 15% rise in May placements to be released on Friday and poor feedlot closeouts are weighing on feeder futures. We could see some seasonal strength develop by the 4th of July.

1. Corn market reacted poorly to the Crop Progress data
2. Packer margins jump higher, feeding margins bleak
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1. Michigan hay buyers should plan purchases early
2. U.S. cattle placements rise in April as feed costs subside
3. Ag markets were mixed to start the new week
4. Corn planting pace turns from record slow to record fast
5. New animal identification rules aid disease traceability
6. Corn and soybean prices continue to retrace 2012 drought rally

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5. Boxed beef hits record highs, cattle weak to lower